Crypto collapse amps up pressure for regulations: Bruce Croxon
Bitcoin rode a wave of risk-on momentum Thursday to hit its highest level in more than a week as recent economic data eased trader concerns that inflation will be too hot to tame.
The world’s largest cryptocurrency by market capitalization jumped more than 5 per cent to hit above US$21,500 in afternoon trading in New York -- the first time it’s crossed the US$21,000 mark this month. Crypto-linked equities, which tend to trade in tandem with Bitcoin, also rallied. Coinbase jumped more than 10 per cent, while miner Riot Blockchain jumped as much as 15.45 per cent, its highest intraday gain since June 21. Ether jumped 8 per cent to as high as US$1,253.
A stock market rally that’s seen the S&P 500 up for the fourth straight day provided some much-needed relief for the battered cryptocurrency, which has fallen more than 50 per cent year-to-date amid monetary tightening and a string of recent liquidations in the crypto market.
“Risk markets are up across the board based on the latest jobs claims numbers so it’s not surprising that crypto is trading higher,” said Ben McMillan, chief investment officer at IDX Digital Assets. “After a cascade of bad news and large liquidations, many crypto investors are still sitting on the sidelines waiting for the next shoe to drop.”
A barrage of economic risks and the threat of more de-levering remains a concern in crypto, suggesting the near-term rally may be short lived. News that customers of bankrupt broker Voyager Digital Ltd. likely won’t get all their money back has struck a new kind of fear into crypto investors who have typically been able to stomach big market downturns.
“A lot of the institutional holders of Bitcoin may be particularly sensitive to the general way that the economy is moving. If the jobs report comes back really weak, inflation comes back even worse, and it looks like a number of the geopolitical issues that are influencing the prices on a number of these core economy assets are not improving, I can’t imagine that that is short-term bullish for Bitcoin,” said Jared Madfes, partner at Tribe Capital.